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S&P’s Credit Rating Upgrade Highlights Strengthened Position Of Bank Of Cyprus

by THEFUTURE.TEAM

June 19, 2024

In a significant development for Cyprus’ financial sector, Standard & Poor’s (S&P) has upgraded the long-term credit rating of the Bank of Cyprus to BB+, just one notch below investment grade, with a positive outlook. This upgrade reflects the bank’s enhanced capital position and robust profit-generation capacity, coupled with a reduction in economic risks within Cyprus.

Strengthened Capitalisation and Profitability

S&P’s upgrade follows a similar improvement in Cyprus’ sovereign credit rating, signifying broader economic stability. The agency cited the bank’s strengthened capitalisation and its ability to maintain solid profitability, even in a challenging economic environment. Despite the anticipated decline in favourable conditions due to high interest rates, S&P expects the Bank of Cyprus to sustain a resilient net interest margin of 350-400 basis points in 2024 and 2025.

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Cost Control and Sustainable Profitability

S&P also highlighted the importance of strict cost control measures in maintaining sustainable profitability. The bank’s cost-to-income ratio is projected to move towards 44-46% by the end of 2026, a significant improvement from the high of 66% observed between 2018 and 2022. This reflects the bank’s strategic focus on efficiency and cost management.

Risk Normalisation and Asset Quality

The agency noted an ongoing normalisation of risk costs, including provisions for recovered real estate assets, which are expected to drop below 80 basis points. This decline is set to further fortify profitability as interest rates stabilise. S&P anticipates the bank will maintain a return on tangible equity above 16% for 2024, and around 12-13% from 2025 to 2026.

Broad Sectoral Recovery

The upgrade also reflects a broader recovery within the Cypriot banking sector. Following years of significant non-performing loan (NPL) sales, securitisations, write-offs, and recoveries, the sector has largely absorbed the impact of the 2012 financial crisis. Although the NPL ratio remains higher compared to other European banks, it continues to decline, reaching 7.3% at the end of March 2024, with a coverage ratio of 53.3%.

Future Prospects

Looking ahead, S&P expects Cypriot banks to gradually expand their operations as legacy issues from problematic loans diminish. The sector is projected to see an average lending growth of 2.5% from 2024 to 2027, marking a shift from the deleveraging trend observed in recent years.

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Electric Vehicle Leaders Urge EU To Maintain 2035 Zero Emission Mandate

by THEFUTURE.TEAM

September 13, 2025

Industry Voices Emphasize the Importance of Commitment

Over 150 key figures from Europe’s electric car sector, including executives from Volvo Cars and Polestar, have signed a letter urging the European Union to adhere to its ambitious 2035 zero emission goal for cars and vans. These industry leaders warn that any deviation could hamper the progress of Europe’s burgeoning EV market, inadvertently strengthen global competitors, and weaken investor confidence.

Evolving Perspectives Within the Automotive Community

This call comes in the wake of a contrasting appeal issued at the end of August by heads of European automobile manufacturers’ and automotive suppliers’ associations. That letter, endorsed by the CEO of Mercedes-Benz, Ola Kaellenius, argued that a 100 percent emission reduction target may no longer be practical for cars by 2035.

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Discussion With EU Leadership on The Horizon

European Commission President Ursula von der Leyen is scheduled to meet with automotive industry leaders on September 12 to deliberate the future of the sector. Facing stiff challenges such as the rise of Chinese competition and the implications of US tariffs, the stakes for the EU’s policy decisions have never been higher.

Potential Risks of Eroding Ambitious Targets

Industry leaders like Michael Lohscheller, CEO of Polestar, caution that any weakening of the targets could undermine climate objectives and compromise Europe’s competitive edge in the global market. Michiel Langzaal, chief executive of EU charging provider Fastned, further highlighted that investments in charging infrastructure and software development are predicated on the certainty of these targets.

Regulatory Compliance And The Mercedes-Benz Exception

A report from transport research and campaign group T&E indicates that nearly all European carmakers, with the exception of Mercedes-Benz, are positioned to meet CO₂ regulation requirements for the 2025-2027 period. To avoid potential penalties, Mercedes must now explore cooperation with partners such as Volvo Cars and Polestar.

Conclusion

The industry’s unified stance underscores the critical balance between environmental aspirations and maintaining competitive advantage. With high-level discussions imminent, the EU’s forthcoming decisions will be pivotal in shaping not only the future of the continent’s automotive sector but also its global positioning in the race towards sustainable mobility.